Office or place of profit - Prohibition against director holding ‑ Employee appointed before director becomes director and he became relative afterwards - Companies Law - Letter : No. 8/16(1)/61‑PR,

Letter : No. 8/16(1)/61 ‑ PR, dated 23 ‑ 1 ‑ 1961. Subject:- Office or place of profit - Prohibition against director holding ‑ Employee appointed before director becomes director and he became relative afterwards Query : Section 314 does not make it clear if a special resolution is required to be passed if an employee of a company becomes related to a director of the company during the course of his employment : (a). in case he had been appointed before the director became a director of the company; and (b). in case he had been appointed after the director became a director which contingency is not provided for under the newly inserted sub-section (1A). Answer : Only the case of employee‑relatives, already in office, before the relative becomes a director, are covered by sub‑section (1A) of the amended section 314. As such, where an employee is appointed to his office before the director becomes a director but the employee becomes related to the director afterwards, as well as the cases falling under category (b) in the query, will require special resolutions to be passed under section 314(1).